Zhen Ding Technology Holding (4958) Q2 2024 earnings summary

Executive summary

• 1H24 revenue reached NT$64.92 billion, up 17.9% year-over-year, with net income up 107.6% and net margin improving to 3.2%.

• 2Q24 revenue rose 37.7% year-over-year, surpassing expectations, with all major applications achieving double-digit growth; IC substrates and Automotive/Server/Base Station segments set single-quarter records.

• The group maintained strong liquidity with cash and cash equivalents of NT$69.44 billion as of June 30, 2024, and total assets of NT$246.56 billion.

• Entering 2H24, demand is expected to rise due to new product launches, with high utilization rates and revenue growth anticipated to exceed prior forecasts.

• The optical business secured new orders and will begin contributing to revenue from 3Q24; the new Thailand fab is on track for trial production in 1H25 and mass production in 2H25.

Financial highlights

• 2Q24 revenue: NT$32,411 million (+37.7% YoY); gross margin: 13.1% (+4.1ppts YoY); net income: NT$667 million (+343.9% YoY); EPS: NT$0.51.

• 1H24 revenue: NT$64,922 million (+17.9% YoY); gross margin: 14.8% (+1.7ppts YoY); net income: NT$2,103 million (+107.6% YoY); EPS: NT$1.55.

• Cash and cash equivalents as of June 30, 2024: NT$69,461 million (+15.9% YoY).

• Cash flows from operating activities were NT$10.16 billion, down from NT$15.22 billion in the prior year, while net cash used in investing activities was NT$1.19 billion, a significant improvement from NT$14.25 billion used last year.

• Total equity increased to NT$139.24 billion, with non-controlling interests at NT$39.61 billion.

Outlook and guidance

• 2H24 expected to follow traditional peak season pattern, with increased demand for IC substrates, servers, and automotive products.

• Revenue growth in 2H24 projected to exceed previous expectations, driven by new product launches and high utilization rates.

• Optical business to contribute revenue from 3Q24; Thailand fab to begin trial production in 1H25 and mass production in 2H25.

• Management continues to focus on capital structure optimization, resource consolidation, and efficiency improvements, as evidenced by the planned merger of Boardtek Electronics and Boardtek Investment.